Audit and Assurance news

The FRC has launched its Audit & Assurance Sandbox, a collaborative space for approaching issues facing the audit and assurance industry, to support high quality audit and assurance work. The sandbox offers a confidential environment for relevant parties to discuss ideas and technical issues in audit and assurance policy areas such as the application of the FRC’s auditing, assurance and ethical standards, relevant technologies, ESG and competition.

Chartered Accountants Ireland has responded to IAASA's consultation on International Standard on Auditing (ISA) (Ireland) 600: Special Considerations – Audit of Group Financial Statements (including the Work of Component Auditors).

As members are aware In December 2022 the new international standards on quality management (QM) come into effect: International Standard on Quality Management 1 (ISQM 1), International Standard on Quality Management 2 (ISQM 2) International Standard on Auditing 220 (revised) (ISA 220 (revised)). These standards are effective for periods beginning on or after 15 December 2022 and effective for other assurance and related services engagements beginning on or after 15 December 2022.  Members are directed to our quality management webpages which have links to the standards and to further guidance including the Technical Alert issued in May 2022 TA 03/2022 Guidance on the Quality Management Standards.  A new Technical Alert has been issued which discusses the transition from ISQC1 to ISQM 1 in relation to assurance engagements and reports prepared under international standards. TA 05/2022 Transition issues arising from the implementation of the Quality Management Standards 2022

The FRC has published new firm-level audit quality indicators (AQIs) following clear support from users of audit services for greater insight into many of the indicators that drive audit quality.   Users of audit services will have additional sources of information which will enable detailed and robust conversations about audit quality with firms.   The AQIs will provide users of audit services provided by the largest UK audit firms with more information about factors that drive audit quality and help them make an informed choice when selecting an auditor.   Audit committees and others will also be able to assess firms on a consistent basis, with the knowledge that AQIs across the firms will be calculated in the same way.    The 11 AQIs include a range of comparable indicators on perceived culture within an audit firm, audit quality inspection results, staff workloads, and the level of partners’ involvement in audits.

IAASA has published its Work Programme for the period 2023 - 2025. The Authority has submitted the Programme to the Minister for Enterprise, Trade and Employment in accordance with section 910 of the Companies Act 2014. IAASA has recently redefined its mission as upholding quality corporate reporting and an accountable profession.  The programme builds on IAASA’s work to date towards achieving that mission across its broad spectrum of activities. The strands of the work programme encompass regulation, promotion of high standards and maximising our impact, and the programme builds strategies around each of these strands and also around the enablers that support the strategies. Commenting on the programme, Chief Executive Kevin Prendergast expects that the Corporate Sustainability Reporting Directive is likely to permeate many aspects of the Authority’s work over the lifetime of the programme, but he is confident that the Authority can deliver on these challenges.

The Financial Reporting Council (FRC) has published a new report setting out examples of good practice to improve auditor scepticism and challenge. A critical attribute of an auditor’s mindset and behaviour is exercising professional scepticism and challenge when performing audits. The most significant quality issues identified by the FRC over a number of years involve the inconsistent application of professional scepticism and challenge, resulting in the poor application of professional judgement. As an improvement regulator, the report summarises what good looks like and provides examples of good practice from the FRC’s ongoing supervision work. The report will be of particular interest to audit firms, audit committee chairs and those with an interest in audit quality. The FRC has also published a report conducted by BritainThinks based on qualitative research to explore the drivers and barriers to auditors exercising professional scepticism and effective challenge.